Without a well-established innovation capability, continuous innovation is nearly impossible.
Most corporates can innovate occasionally and be successful in doing so. Yet sporadic innovation is not enough to keep up with changing markets and evolving demanding customer needs. Unfortunately, not all corporates know how to innovate consistently over time.
At our recent Innov8rs Connect on Strategy, Leadership & Organization, Jeffrey Phillips (Senior Strategy and Innovation Consultant) discussed what it takes to build an innovation capability for continuous innovation. Here’s a summary of his remarks.
Building An Innovation Capability: Limits To Overcome
Innovation is about bringing something new to the market that has value for customers and (hopefully) generates profit for the business. More than just product innovation, innovation encompasses services, processes, experiences, business models, and more. In order to remain competitive, companies must continually develop new products, services, and processes that meet the needs of their customers.
"Nokia was the market leader in cell phone handsets. Yet they innovated once, then failed to innovate again. All innovators eventually become comfortable in their space and lose the ability to keep innovating. We must stay hungry and understand how to innovate over time”.
Therefore, every corporate needs to build a capability to regularly innovate in several dimensions, across multiple product groups, and with a variety of outcomes, due to the amount of change and new entrants in the marketplace. It's easier said than done. Jeffrey believes that there are at least five constraints to the ability of organizations to innovate more than occasionally and to move from periodic, project-driven to capability-based, continuous innovation:
1. Time and Resource
Most organizations are committed to making their processes more efficient, which leads to more rightsizing and outsourcing. However, that efficiency tends to combine, contain, and constrain resources and time. Most people do not consider innovation their "day job", but rather a second or third job that may conflict with regular business operations. Because of this, new and different ideas have very little room to flourish.
2. Existing Knowledge and Processes
Existing processes and knowledge are excellent for day-to-day work and regular operations. As such, they're not helpful or valuable when it comes to innovating and building an innovation capability. They can actually become a barrier. It goes without saying that innovation beyond incremental innovation requires new and different approaches, concepts, tools, and ways of thinking.
3. Efficiency Optimization
Organizations have eliminated risk and variance in their operations through rightsizing, outsourcing, lean, and agile. Yet innovation is inherently risky and uncertain, so you need to find ways to comfortably and capably re-introduce these “undesirable” elements for your corporate to innovate regularly.
4. Innovation Tools or Methods
Innovation tools and methods are very rare in most organizations. In other cases, they're misused. Furthermore, most corporates make the mistake of using the same metrics for innovation as they do for other projects- this is why ROI is often described as a "killer of innovation".
5. People Skills
In the corporate context, we tend to believe that someone who is excellent at regular day-to-day work can also be excellent at innovation. However, they may lack training in innovative thinking, creativity, and design thinking. They may also have conflicting goals and measures that promote their "day job" over innovation.
“A famous study says children are very creative. Yet by the time they leave elementary school, they've lost all their creativity because the school system teaches them to look for the right answer. Organizations work the same way: they want people to look for the right answer rather than the right problem and the right set of tools”.
Although they're great at incremental innovation and minor changes, they'll never succeed at disruptive innovation. In terms of knowledge, processes, and patterns, they are tied too closely to the way things work today. "To create Horizon Two or Horizon Three innovations and be disruptive, you need to go find the people on the periphery who are creative enough to identify new, unmet needs and come up with a solution accordingly", says Jeffrey. Corporates have to constantly reinforce these skills.
Building An Innovation Capability That Lasts: Here’s How
As with any other significant corporate initiative, leaders play a crucial role in the success of a continuous innovation discipline. And unless the C-suite sponsors innovation activities and ensures resources, innovation teams' efforts will suffer, and only sporadic innovation will be possible.
“While innovators are responsible for the tactical work of innovation within an organization, executives determine the climate and framework that facilitate or hinder innovation”.
To support leaders in identifying what they need to build a capability to innovate consistently and with better outcomes, Jeffrey developed the "Executive Innovation Work Mat". By using this tool's seven key innovation factors, leaders can evaluate their companies' strengths and weaknesses, and assess their current business structure's readiness for innovation.
The seven factors are: strategic alignment, motivations and metrics, structure, governance, culture, environment, and common language (which ties all other elements together). Any organization that wishes to build a lasting innovation capability needs them to work together in a mutually reinforcing loop. Executives are responsible for further developing these factors, using them to build an innovation capability on corporate strengths, and eliminating gaps that impede innovation.
1. Strategic Alignment
Innovation is not a strategy. Instead, it’s a core element of corporate strategy and a common, recurring way to accomplish some portions of the overall strategy. As such, executives must link innovation goals and outcomes to strategic goals.
2. Structure, Function, and Design
In order to increase innovation chances of success, executives must define and implement an innovation "structure" – e.g., innovation function, processes, and scopes – and build the skills to use it consistently and correctly. This will ensure innovation isn't conducted as a one-off, ad hoc activity.
3. Governance
When set up properly, governance is a very tactical factor that can be dealt with fairly quickly and lead to good results. Yet many executives didn't grow up managing innovation and might be uncomfortable or unfamiliar with governing innovation projects. Even so, they must establish the basic frameworks for innovation, such as funding mechanisms, scope definitions, targets, timeframes, metrics for reporting, and evaluation.
4. Culture
Cultural attitudes and beliefs, as well as formal and informal decision-making processes, tend to stymie any innovation activity. It's common for organizations to be so attached to their culture that they ignore and challenge anything new. In other cases, most corporate cultures talk about accepting innovation but resist it in practice. Executives should change internal behaviors by instilling cultural attitudes that embrace innovation. However, corporate culture doesn't change easily or quickly. It's the kind of change that requires consistent communication and, again, executive engagement.
5. Environment
Along with culture, the environment is a very intangible and hard-to-change factor that can easily slow or hinder innovation when it's not fit for purpose. Executives must identify all the processes, groups, and functions necessary to accelerate an innovative idea from concept to commercial product or service. They must also facilitate the transitions between those same processes, groups, and functions to reduce or eliminate barriers and gaps between them.
6. Motivation and Metrics
How are you motivating people to innovate? Does their reward system incorporate innovation? If recognition is only tied to the day-to-day job and there's no incentive for it, you'll never get much innovation. Consequently, executives must constantly identify and develop new motivational actions and programs (e.g., new roles and career paths). In light of what we've already discussed, it's important to note that innovation requires ad hoc measures and metrics other than ROI, which is still the most commonly used metric.
7. Common Language and Communication
Common language binds all the six elements above together. The message you convey, the actions you take, and the level of involvement you exhibit matter and send signals to the rest of the organization. Executives must agree on a common language and definition of innovation and communicate frequently and clearly about it. And whenever possible, leadership must move beyond simply talking about innovation- participation and regular reporting are essential indicators of actual engagement.
